Yen weakens beyond 99 per dollar for first time since May 2009

The yen weakened beyond 99 per dollar for the first time since May 2009 on speculation Bank of Japan measures to fight deflation announced last week will further debase the currency.

The yen dropped against all its 16 major counterparts for a third day after BOJ officials said last week they will boost monthly bond purchases to 7.5 trillion yen ($80 billion), exceeding the 5.2 trillion yen forecast by economists surveyed by Bloomberg News. The dollar declined for a fourth day versus the euro before Federal Reserve Chairman Ben S. Bernanke speaks today. South Korea’s won slid to an eight-month low as military tensions on the Korean peninsula escalated.

“It’s more of the same right now and the conversation has diverged into where’s the money going to end up,” Geoffrey Yu, a senior currency strategist at UBS AG in London, said in a phone interview of yen depreciation. “The yen flows, at the end of the day, they’re driven by yield.”

The yen fell 0.9% to 98.49 per dollar at 9:46 a.m. New York time, after sliding to 99.01, the weakest level since May 8, 2009. It last traded weaker than 100 on April 14, 2009. The currency tumbled 3.4% last week.

The yen declined 1.1% to 128.17 per euro after depreciating to 128.84, the least since January 2010. The dollar dropped 0.2% to $1.3020 per euro.

Rand Rise

South Africa’s currency gained 0.7% versus the dollar amid speculation monetary stimulus by global central banks will continue, boosting demand for high-yielding assets. The rand rallied against the dollar to a fourth day, rising to 9.0305.

Poland’s currency rose 0.8% to the greenback, the most of the dollar’s 31 most-traded peers, climbing for a third day and reaching 3.1726.

French, Belgian and Austrian bond yields fell to records as investors sought higher-yielding alternatives to German bunds amid a flood of liquidity policy makers to revive economic growth. Italian and Spanish securities advanced, with Spain’s two-year yields dropping below 2% for the first time since October 2010.

The BOJ on April 4 suspended a cap on some bond holdings and dropped a limit on debt maturities. Policy makers set a two- year horizon for their goal of 2% inflation. The central bank’s next policy meeting is on April 26.